Nick Joseph

Nick Joseph asked for an update on the previously stated four to five-year recovery timeline for the life science industry broadly, inquiring if anything has changed to move that timeline up or delay it.

Answer

Joel Marcus, Executive Chairman and Founder, clarified Peter Moglia's previous statement: the recovery timeframe is estimated at two to three years for Alexandria's heavily invested, functional lab markets (like Cambridge, Watertown, Seaport) and four to five years for tertiary areas (like Somerville, Alewife) where oversupply resolution might involve changing property use.

Nick Joseph asked if anything had changed Alexandria Real Estate Equities' previously stated 4- to 5-year recovery timeline for the life science industry, potentially moving it up or delaying it.

Answer

Joel Marcus, Executive Chairman and Founder, and Peter Moglia, CEO and CIO, clarified that the 4-5 year recovery timeline applies to tertiary submarkets (like Somerville, Alewife) with significant inventory and less inherent lab market demand, where resolution will likely involve changing use. For core lab markets (Cambridge, Watertown, Seaport) where Alexandria is heavily invested, the recovery is expected to be shorter, around 2-3 years.

Nick Joseph inquired about the definition and pricing of 'equity-like capital' and whether the turning point in the bear market is also evident in the transaction market for stabilized assets, specifically regarding buyer demand.

Answer

Joel Marcus, Executive Chairman and Founder, explained 'equity-like capital' as various forms of capital inflow, including dividend savings and joint venture sales. Marc Binda, CFO and Treasurer, clarified that asset sales would constitute the vast majority of next year's capital plan. Peter Moglia, CEO and CIO, confirmed strong demand for opportunistic assets, including life science properties and alternative uses, from residential developers.

Nick Joseph asked for details on why the Campus Point tenant opted for a build-to-suit project instead of available vacant space and inquired about current trends in the leasing pipeline, such as tenant size or common themes.

Answer

Joel Marcus, Founder & Executive Chairman, explained that major R&D firms seek comprehensive, amenity-rich campus environments, not isolated buildings. Hallie Kuhn, SVP of Life Science & Capital Markets, added that the specialized infrastructure needs of such tenants, like power capacity and vibration controls, necessitate a build-to-suit solution. Regarding the pipeline, Mr. Marcus stated that trends are highly specific to each submarket, making generalizations difficult.

Nick Joseph asked about current transaction market conditions, specifically if going-in yields have changed due to weaker rent growth assumptions, and how they compare to development yields and buybacks.

Answer

Chief Investment Officer Matt Birenbaum stated that stabilized asset sales pricing has not significantly changed, remaining in the mid-to-high 4% to low-to-mid 5% cap rate range. He noted D.C. sales were on the higher end and suburban Seattle on the lower end, with cap rates holding firm and transaction velocity up in Q3 2025 compared to Q3 2024.

Nick Joseph asked about the comparison between development yields, share buyback yields, and real-time transaction market cap rates, and whether going-in yields have shifted due to weaker rent growth assumptions across different markets.

Answer

Matt Birenbaum, Chief Investment Officer, stated that cap rates for stabilized asset sales have remained consistent, ranging from mid-to-high 4% to low-to-mid 5%, depending on geography. He observed that transaction velocity for multifamily trades increased materially in Q3 2025 compared to Q3 2024, with cap rates holding firm, particularly for assets with good rent roll momentum.

Nick Joseph of Citigroup inquired about the specifics of delayed development occupancies, particularly in Denver, and sought to understand the company's confidence in meeting year-end occupancy targets despite a potentially missed peak leasing season.

Answer

Chief Investment Officer Matthew Birenbaum explained that while overall leasing velocity remains strong at around 30 homes per month, one urban Denver project faced elevated concessions in a competitive submarket. He and COO Sean Breslin expressed confidence in catching up by year-end, citing strong performance in newly opened lease-ups in markets like South Miami and Northern New Jersey.

Nick Joseph asked about the company's approach to forecasting next year's growth when rent growth is falling, distinguishing between temporary and persistent factors. He also inquired about capital allocation, specifically leaning into share buybacks versus other investment opportunities.

Answer

Michael Manelis (COO) explained that they modeled continued deceleration for the rest of the year but feel positive about the setup for next year due to reduced competitive supply. Mark Parrell (President and CEO) discussed the $100 million buyback, noting the attractiveness of their stock compared to other investments, and the need to balance buybacks with asset sales due to tax gain limits and fixed costs of running a public company.

Nick Joseph asked about Equity Residential's approach to forecasting future rent growth given current declines, distinguishing between temporary and persistent factors. He also inquired about the company's capital allocation strategy, specifically regarding increasing share buybacks versus other investment opportunities, considering the current stock valuation.

Answer

Michael Manelis, Chief Operating Officer, explained that the company is modeling continued deceleration for the remainder of the year but anticipates a solid setup for next year due to reduced competitive supply, with consumer sentiment and job growth being key wildcards. Mark Parrell, President and CEO, detailed capital allocation considerations, including the attractiveness of buybacks versus other investments, the availability and cost of capital (debt/asset sales), and acknowledged tax gain limits and the fixed costs of running a public company.

Nick Joseph asked about Curbline Properties Corp.'s strategy regarding equity issuance, specifically the ATM program, given its strong balance sheet and current stock valuation relative to NAV and acquisition cap rates. He also inquired about the stabilized yield on recent lease-up acquisitions compared to initial cap rates.

Answer

Conor Fennerty, CFO, stated that the ATM and share buyback programs were put in place to provide all available tools, but no equity has been issued to date, with a high bar for future issuance based on accretive uses. David Lukes, CEO, noted that recent acquisition cap rates were slightly higher than last quarter, blending to the low 6%s for the year, and stabilized yields depend on market rent growth, which appears strong.

Nick Joseph asked about Curbline Properties' balance sheet strategy, including the ATM program and potential equity issuance, considering the stock's trading relative to NAV and current acquisition cap rates. He also inquired about the stabilized yield on recent lease-up acquisitions compared to their in-place cap rates at acquisition.

Answer

CFO Conor Fennerty explained that Curbline instituted an ATM and share buyback program to have all available tools. He noted that equity would be considered if accretive for a capital use, but the company currently has significant liquidity and embedded growth, with no equity issued to date. CEO David Lukes stated that going-in cap rates for recent acquisitions were higher this quarter, blending to the low 6%s for the year, and that stabilized yield depends on growing market rents, making a precise forecast difficult for the next 2-3 years.

Nick Joseph inquired about the specific timing and settlement requirements for Agree Realty's outstanding forward equity, particularly concerning upcoming expirations. Joseph also asked about the sustainability of the current acquisition pace, seeking insight into any potential slowdowns.

Answer

Peter Coughenour, CFO, clarified that approximately 6 million of the 14 million outstanding forward equity shares are expected to settle in Q4 2025 as contracts mature, with the remainder anticipated in 2026. Joey Agree, President and CEO, responded that no slowdown in the acquisition pace is foreseen for 2025.

Nick Joseph asked about the timing and settlement requirements for outstanding forward equity, particularly concerning upcoming expirations, and inquired if any factors on the horizon could slow the current acquisition pace for 2025.

Answer

CFO Peter Coughenour detailed that approximately 6 million of the 14 million outstanding forward equity shares are expected to settle in Q4 2025, with the remainder in 2026. President and CEO Joey Agree stated no anticipated slowdown in the acquisition pace for 2025, noting the current 10-year Treasury levels.

Nick Joseph asked about the normalized growth rate of data centers versus industrial from an owned perspective, beyond development, to understand its contribution.

Answer

CEO Hamid Moghadam explained that the contribution of data centers to the growth rate is primarily through the reinvestment of value creation back into the core logistics business. He benchmarked this against a $5 billion logistics development run rate, which contributes about 150 basis points of additional growth per annum, suggesting a similar concept for data center value creation.

Nick Joseph from Citigroup questioned the rationale for maintaining a 60 basis point bad debt forecast despite low actuals and asked about the pricing spread between portfolio deals and single-asset transactions.

Answer

EVP & CFO Vincent Chao explained the bad debt forecast is a prudent measure to maintain 'dry powder' for the unresolved At Home bankruptcy and normal course turnover. President and CEO Stephen Horn added that the pricing spread for portfolios has widened, with some larger portfolios trading at a premium due to new capital entering the space.

Nick Joseph, speaking on behalf of Eric Wolfe's team, asked if there are any signs of construction starts increasing in CubeSmart's markets and how much in-place rents would need to rise for new development to become economically viable again.

Answer

CEO Christopher Marr responded that the trend is the opposite of an increase, citing high costs for materials, land, and labor, along with tight financing, as significant headwinds for new development. He believes it will be 'a bit of a ways to go' before new supply pencils out, making the supply outlook for 2026-2027 constructive for existing operators.

Nick Joseph of Citigroup Inc. asked if there are any signs of construction starts increasing in CubeSmart's markets and questioned how much in-place rents would need to rise before new supply development becomes financially viable again.

Answer

President & CEO Christopher Marr responded that construction starts are actually trending down due to a combination of high material costs, expensive labor, and tight financing conditions. He believes a significant gap remains before rental rates can support the economics of new development projects.

Nick Joseph of Citigroup inquired about UDR's confidence in its second-half blended lease rate growth assumptions, noting that peers have signaled a weaker peak leasing season, and asked if the rent growth spread between regions is expected to narrow.

Answer

SVP & COO Michael Lacy explained that the guidance raise is based on strong execution to date, with first-half blended rent growth exceeding the high end of the original guide. He noted that while market rents have been more muted recently, leading to a revised back-half outlook with renewal growth around 4-4.5%, the strong first-half performance provides a buffer. He also confirmed the spread between coastal and Sunbelt markets is narrowing as expected, from a 450 basis point gap in Q1 to around 400 basis points in Q2.

Nick Joseph of Citigroup inquired about any changes in lease negotiation timelines and tenant willingness to sign leases, particularly with more clarity on tariffs. He also asked about the tenant reception to KRG's push for higher embedded escalators.

Answer

CEO John Kite stated that leasing activity has picked up substantially, with no signs of indecisiveness from tenants. President & COO Tom McGowan added that cooperation between landlords and tenants has improved to expedite store openings. Regarding escalators, John Kite pointed to the company's results, including 3.4% embedded growth in the first half of the year, as proof of their success, noting it's a key focus.

Nick Joseph of Citigroup inquired about trends in lease negotiation timelines, tenant willingness to sign leases amid tariff discussions, and the company's success in pushing for higher embedded rent escalators.

Answer

CEO John Kite reported that leasing activity has accelerated, with no slowdown related to tariffs, and highlighted strong demand across the board. President & COO Tom McGowan added that landlord-tenant cooperation is improving to expedite store openings. Kite also noted the success in achieving higher rent growth, citing 3.4% embedded escalators on new small shop leases as evidence.

Nick Joseph of Citigroup inquired about any changes in lease negotiation timelines and tenant willingness to sign leases, particularly with more clarity on tariffs, and also asked about the tenant response to the company's push for higher embedded rent escalators.

Answer

Chairman and CEO John Kite stated that leasing activity has picked up substantially, with significant demand across the board, negating any earlier indecisiveness. President and COO Thomas McGowan added that landlord-tenant cooperation has increased to expedite store openings. Regarding escalators, Mr. Kite cited the 3.4% achieved on new small shop leases as evidence of their success, while acknowledging it remains a challenge with anchor tenants.

Nick Joseph from Citigroup Inc. questioned the sustainability of the improved expense recovery rates observed in the quarter.

Answer

EVP & CFO Mike Mas clarified that the Q2 recovery rate was boosted by a one-time, approximately $1 million benefit from the annual reconciliation process. He anticipates the rate will decline by about 100 basis points from Q2 levels going forward. However, the fundamental driver of higher recoveries—a projected 100+ basis point increase in average commenced occupancy for the year—will ensure rates remain strong.

Nick Joseph from Citigroup asked about the sustainability of the high expense recovery rates observed in the quarter.

Answer

CFO Mike Moss stated that the recovery rate will likely decelerate going forward. He explained that Q2 included a one-time benefit of approximately $1 million from the annual reconciliation process. The fundamental driver of the elevated rate is higher average commenced occupancy, which is now projected to increase by over 100 basis points for the full year, providing a sustained, albeit lower, benefit.

Nick Joseph of Citigroup inquired about Welltower's optimal capital stack going forward, considering the 3.5x run-rate leverage target, recent capital markets activity, and significant investment pipeline.

Answer

CEO Shankh Mitra explained that a low-leverage, strong balance sheet is core to their 'handshake business' model, ensuring they can always honor commitments. He stated that the funding mix—debt, equity, asset sales, and retained cash flow—is determined by the most attractive risk-adjusted cost of capital at a given time. As conviction in growth rises, the internal cost of equity increases, which can make debt a more attractive option.

Nick Joseph asked for quantification on how far off the market is from new construction making economic sense, considering current rent growth and costs.

Answer

Shankh Mitra (CEO & CIO) stated that it currently makes no economic sense to build. He explained that a 25-30% increase in RevPOR relative to operating labor costs would be needed for new construction to become viable, a level not achievable by rent growth alone in most markets.

Nick Joseph of Citigroup inquired whether the life science supply coming offline was considered truly competitive space. He also asked for current private market cap rates for medical office buildings (MOBs) across various quality tiers.

Answer

CEO Scott Brinker stated that the 4 million square feet of supply removed was mostly less competitive space, though some directly competitive properties are now marketing to alternative uses. For MOBs, he indicated that cap rates for the types of high-quality assets Healthpeak owns are trading in the 6% to 7% range. He noted that life science cap rates are much harder to pinpoint due to lower transaction volume, except for long-term leased, credit-tenant assets.

Nick Joseph from Citigroup inquired about the competitiveness of the life science supply that has recently come offline and asked for current private market cap rates for Medical Office Buildings (MOBs).

Answer

CEO Scott Brinker stated that most of the lab supply removed from the pipeline was not directly competitive, though some competitive space is now being marketed for alternative uses. He estimated that cap rates for Healthpeak's quality of MOB assets are trading in the 6% to 7% range, while life science cap rates remain much harder to determine.

Nick Joseph of Citigroup asked for the 2025 outlook for office leasing, with a focus on the U.S. West Coast, and inquired about the company's capital allocation priorities between share repurchases and M&A.

Answer

CFO Karen Brennan noted encouraging signs in office leasing, with the U.S. market about 80% through its downsizing cycle and activity at its highest since 2019. She expects gradual leasing growth in 2025. CEO Christian Ulbrich stated that capital allocation balances share repurchases against platform investments and M&A, with a commitment to at least offset share dilution from stock compensation.

Nick Joseph of Citi asked about Essex's pricing strategy, the outlook for new lease and renewal rates, and the potential market impact if Proposition 33 were to pass.

Answer

Executive Angela Kleiman explained that Essex has shifted to a seasonal occupancy-focused strategy for Q4. Renewal offers are being sent in the mid-4% range and are finalizing in the high-3s. Regarding Proposition 33, she expressed confidence it would be defeated, noting that only 8% of California cities have rent control, many mayors oppose the measure, and similar initiatives failed by large margins in 2018 and 2020.

Nick Joseph of Citigroup asked if the California asset sales would be outright dispositions, questioned the strategic rationale for the Blackstone JV instead of a simpler outright sale, and inquired about the pricing of the OP units issued in the D.C. acquisition.

Answer

EVP, Co-CIO John McGrath confirmed all California sales would be outright. CEO Terry Considine explained the JV was an advantageous balance of maintaining the operating platform, adding value, and achieving attractive levered returns. EVP & CFO Paul Beldin reported the OP units were priced at approximately $50 per unit, based on a trailing average price at closing.